Sticking Around Too Long? Dynamics of the Benefits of Dual-Class Structures

By Hyunseob Kim and Roni Michaely April 12, 2018 by renholding

Lawyers and academics generally have a dim view of dual-class share structures. When Snap Inc., a technology-based social media company, was preparing for its initial public offering (IPO) in early 2017, for example, CalPERS and many other prominent institutional investors …

Stock Market Indices: Inside the Black Box

By Anita Anand and Adriana Z. Robertson March 21, 2018 by renholding

The news that a whistleblower contacted U.S. regulators last month about alleged manipulation of the Chicago Board Options Exchange Volatility Index, or VIX, highlights near universal reliance on information that stock market indices provide. While the VIX is not itself …

Spotify’s Direct Listing in the U.S. and Lessons from the UK

By Ambrus Kecskés March 1, 2018 by renholding

If all goes well with its February 28 filing with the Securities and Exchange Commission, Spotify will be the first firm to go public in the U.S. via a direct listing on a stock exchange. Simply put, this means that, …

SEC Commissioner Jackson Talks Mandatory Arbitration

By Robert J. Jackson, Jr. February 28, 2018 by renholding

I’m so glad to be back home here in New York. It’s an incredible honor to be speaking after Mayor Bloomberg today. And I’m sure the Mayor will be pleased to know that I plan to return and speak in

…

SEC Investor Advocate Discusses Mandatory Arbitration as Illusory Remedy for Shareholders

By Rick A. Fleming February 27, 2018 by renholding

Today [February 24, 2018] is a special day for the [Securities and Exchange Commission’s] Office of the Investor Advocate.[1] I started this job four years ago today, and because I am the first Investor Advocate that is also the …

Optimal Disclosure and Litigation Rules around IPOs and SEOs

By Onur Bayar, Thomas Chemmanur and Paolo Fulghieri February 6, 2018 by renholding

In recent years, there have been a number of reforms to the legal and regulatory framework governing disclosures and litigation around initial public offerings (IPOs) and seasoned equity offerings (SEOs). The most prominent of these are the JOBS Act of …

The Spotify Listing: Can an “Underwriter-less” IPO Attract Other Unicorns?

By John C. Coffee, Jr. January 16, 2018 by renholding

Press reports indicate that Spotify, the music streaming company, is planning an initial public offering in March or April of this year, and that it plans to use a novel “direct listing” approach that has not previously been used at …

Debevoise & Plimpton Discusses FCA’s Reforms to UK’s IPO Process

By James C. Scoville, Vera Losonci, Laurence Hanesworth and Thomas Matthews November 21, 2017 by Carly Goeman

The UK Financial Conduct Authority (the “FCA”) has published changes to the Conduct of Business sourcebook (“COBS”) to boost the transparency of the IPO process and tackle conflicts of interest that may arise from the interaction between an issuer and …

How Do Small Issuers React to Innovation in Securities Offering Methods?

By Anzhela Knyazeva November 2, 2017 by renholding

In 2015 the U.S. Securities and Exchange Commission adopted amendments that significantly expanded Regulation A, a previously little used provision that allows companies to conduct small public securities offerings without having to comply with all the requirements applicable to traditional …

Ropes & Gray Discusses U.S. Treasury’s Report on Capital Markets

By Keith F. Higgins October 20, 2017 by renholding

On Friday, October 6, the Treasury Department issued a report to the President on streamlining and reforming U.S. capital market regulation. The report covers recommendations on nine topics across the U.S. financial regulatory system. One of the topics – Access …

Davis Polk Explains How New Revenue Recognition Rules May Slow 2018 Offerings

By Alan F. Denenberg, Joseph A. Hall, Michael Kaplan, Sarah K. Solum and Richard D. Truesdell, Jr. October 9, 2017 by renholding

New revenue recognition rules (ASC 606 and IFRS 15) are required to be adopted by most public companies starting January 1, 2018 and most private companies starting January 1, 2019. These changes are widely regarded as some of the most …

Another Reason Why Companies Avoid IPOs

By Bernard S. Sharfman September 29, 2017 by renholding

In a recent New York Times article, Steven Davidoff Solomon listed several possible explanations for a significant decline in the number of initial public offerings (IPOs). Among the most interesting was that there are many large and successful high-tech …

How Dual Class Shares in IPOs Can Create Value

By Bernard S. Sharfman August 1, 2017 by renholding

The shareholder empowerment movement (the “movement”), driven primarily by public pension funds and union-related funds with over $3 billion in assets, has renewed its effort to eliminate, restrict, or at least discourage companies from creating dual class share structures in …

Benefit Corporations and Public Markets

By Brett McDonnell July 31, 2017 by renholding

Benefit corporations are a new legal form of business association created to support social enterprises. Over half of U.S. states have adopted a benefit corporation statute, and over 2,000 companies have chosen the form. So far, almost all of these …

The Agency Costs of Teamwork

By Jeremy McClane May 9, 2017 by renholding

It is common wisdom among transactional lawyers that good teamwork results in smoother deals and better service for their clients. Perhaps for this reason, capital-markets practices frequently tout their teamwork skills as a source of value for clients, especially in …

Can Investors Anticipate Post-IPO Mergers and Acquisitions?

By Christopher W. Anderson, Gokhan Torna and Jian Huang March 21, 2017 by renholding

Of the nearly 6,000 U.S. firms that conducted initial public offerings between 1980 and 2008, 38 percent became merger bidders within three years after the IPO and 12 percent became takeover targets. It is important that investors understand these developments, …

Fool’s Gold? Equity Compensation and the Mature Startup

By Abraham Cable December 8, 2016 by renholding

The Silicon Valley ecosystem has changed profoundly since the dizzying heights of the dot-com era. Consider two of that era’s iconic companies: Yahoo! and eBay. At the time of their IPOs, both of these companies were mere infants by today’s …

How Venture Capital Improves the Market Value of Firms that Go Public

By Thomas Chemmanur, Karthik Krishnan and Qianqian Yu November 17, 2016 by renholding

It is well established that venture capitalists can improve the product market value — the quality of projects and employees — at the private firms they invest in, either by making the firms more efficient (Chemmanur, Krishnan, and Nandy (2011)) …

Venturing Beyond the IPO: Venture Capitalists’ Investments in Newly Public Firms

By Peter Iliev and Michelle Lowry May 18, 2016 by ilyabeylin

A wide body of literature emphasizes that venture capitalists focus on young private companies, generally in high-tech industries. However, contrary to this notion, we find that 29% of the firms that were backed by VCs prior to the IPO received …

The Perils, Protections and Proliferation of Pre-IPO Options: Expanding the 4(1½) Exception to Employee Options

By Penina Moisa March 18, 2016 by jbarrowscls

Many would describe the era we are living in as a “startup bubble.” Not only has the number of startup companies increased dramatically, but many startups have also achieved record-breaking valuations. Alibaba, an e-commerce site, recently went public at a …

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